Cenovus shares remain under pressure despite a decent Q1
A disgruntled shareholder has asked the Ontario Securities Commission (OSC) to block Cenovus' recent acquisition of oil sands and natural gas assets from ConocoPhillips. The investors want the company to put the deal to a shareholder vote.
Cenovus stock is down almost 20% since the deal was announced, due in part to the issuance of almost 400 million new common stock, diluting shares by 47%. The company insists a shareholder vote is not required for asset purchases or equity financing arrangements.
Cenovus wants to sell $3.6 billion worth of non-core assets to help improve its balance sheet.
RBC reported that CEO Brian Ferguson floated the idea of "potentially monetizing some portion of the Deep Basin midstream assets" presumably to raise cash. The natural gas properties were part of the package of properties purchased from ConocoPhillips just a few weeks ago. Ferguson also reiterated this week that the company's Pelican Lake and Suffield conventional assets have "attracted strong initial interest from a wide variety of potential purchasers."
As part of its first quarter earnings release this week, Cenovus reported a smaller-than-expected loss of $39 million, versus a loss of $423 million for the same time last year.
The company produced 181,501 bbl/day of bitumen in Q1 (pre-acquisition), up 32% from the same time last year. Most of the increase was attributed to the continued ramp-up of the Christina Lake phase F and Foster Creek phase G expansion projects.
Once the deal closes, Cenovus will have regulatory approvals in place for 735,000 bbl/day of production out of its oil sands assets. Cenovus also says it plans to implement a solvent-aided process at its SAGD facilities to potentially enhance recovery, reduce stream requirements and improve netbacks.
CENOVUS ENERGY CENOVUS DELIVERS STRONG FIRST QUARTER OPERATIONAL PERFORMANCE